Dow Jones Industrial Average Rises 147 Points as Chinese Trade Talks are Extended into Third Day  

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The Dow Jones Industrial Average rose 147 points in premarket trading this morning following news that negotiations between Washington and Beijing have been extended for a third day.

Following two days of trade talks in the Chinese Capital, President Donald Trump reported that negotiations are going “very well.” Reports indicate that progress is being made in convincing China to buy more US-made goods.

Today, the Dow will try to extend this week’s winning streak to four days, a figure we haven’t seen since November 2018. Keep an eye out for markets’ continued reaction to the prolonged government shut down and the release of December’s Federal Reserve meeting minutes.

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Here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

Index Previous Close Point Change Percentage Change
Dow Jones 23787.45 256.10 1.09%
S&P 500 2574.41 24.72   0.97%
Nasdaq 6897.00 73.53   1.08%

Now, here’s a closer look at today’s Money Morning insight, the most important market events and stocks to watch.

The Top Stock Market Stories for Wednesday

  • The government shutdown continued in its third week. On Tuesday night, President Trump gave a televised speech on the state of the shutdown and called for Congress to authorize spending for a border across the U.S.-Mexico border. Democratic leaders Speaker Nancy Pelosi (D-California) and Senator Chuck Schumer (D-New York) called on Trump and Congress to pass a spending bill to reopen the government and then continue the debate on immigration policy.
  • The government shutdown could do damage to America’s pristine AAA credit rating. Fitch Ratings has warned of a potential cut to the U.S. credit rating should the government shutdown continue in the future. With the U.S. facing record deficits and total debt above $22 trillion, the agency said that a rating downgrade could happen if the government shutdown triggers a breach of the nation’s debt ceiling. The U.S. government’s credit rating was cut for the first time ever during a similar budget battle on Capitol Hill in 2011.
  • Today, markets will pay close attention to minutes from the December Federal Reserve meeting. The minutes will reveal the mindset and stances of America’s central bankers after they increased the benchmark interest rate by 25 basis points from 2.25% to 2.5%. Investors are looking for clues on the timing of the Fed’s next rate hike. Fed Chairman Jerome Powell said after the release of the rock-solid December jobs report that the central bank will be more flexible in the months ahead with interest rates.

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Stocks to Watch Today: BBBY, BA, CAT, STZ, AAPL

  • Shares of Boeing (NYSE: BA) and Caterpillar (NYSE: CAT) both pushed higher after the first round of trade talks between U.S. and Chinese trade officials were extended to a third day (they will conclude today). Both companies conduct a significant amount of business in China, the world’s second largest economy. Investors are wondering if it will be possible for both nations to reach a deal before the March 1 deadline. Otherwise, we will see another round of tariffs that increase import duties to 25%.
  • Bed Bath & Beyond (Nasdaq: BBBY) leads the busiest day of earnings reports this week. The retailer has been under pressure over the last year, with its stock plunging roughly 49%. Wall Street analysts expect the firm to report earnings per share of $0.18 on top of $3.03 billion in revenue.
  • Constellation Brands (NYSE: STZ) will also report earnings today. While the company has generated a lot more buzz due to its big investment in cannabis producer Canopy Growth (NYSE: CPC), shares were off about 30% in 2018. Constellation is best known as the brewer behind Corona, Pacifico, and Modelo Especial.
  • Apple Inc. (Nasdaq: AAPL) CEO Tim Cook is “optimistic” about a deal between the United States and China. On Tuesday, Cook told CNBC that the weakness in iPhone sales that the company has faced in recent months is temporary. “The product pipeline has never been better,” Cook said. “The ecosystem has never been stronger.”
  • Today, look for earnings reports from Greenbrier Companies (NYSE: GBX), Lennar Corp. (NYSE: LEN), KB Home (NYSE: KBH), Acuity Brands (NYSE: AYI), Motorcar Parts of America (Nasdaq: MPAA), MSC Industrial (NYSE MSM), PriceSmart (Nasdaq: PSMT), and WD-40 (Nasdaq: WDFC).

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